441 U.S. 1, 8–9, 99 S.Ct. 1551, 1556–57 (1979)
Columbia Broadcasting System, Inc. (CBS) operates one of three national commercial television networks, supplying programs to approximately 200 affiliated stations and telecasting approximately 7,500 network programs per year, many of which use copyrighted music recorded on the soundtrack.1 CBS also owns television and radio stations in various cities and is the giant of the world in the use of music rights.2
In 1914, Victor Herbert and a handful of other composers organized the American Society of Composers, Authors and Publishers (ASCAP) as a clearinghouse because those who performed copyrighted music for profit were numerous and widespread and most performances were fleeting, making individual negotiation and detection of unauthorized uses impractical.3 As ASCAP operates today, its 22,000 members grant it nonexclusive rights to license nondramatic performances of their works, and ASCAP issues licenses and distributes royalties to copyright owners in accordance with a schedule reflecting the nature and amount of use of their music and other factors.4 Broadcast Music, Inc. (BMI), a nonprofit corporation owned by members of the broadcasting industry, was organized in 1939, is affiliated with or represents some 10,000 publishing companies and 20,000 authors and composers, and operates in much the same manner as ASCAP.5 Almost every domestic copyrighted composition is in the repertory either of ASCAP, with a total of three million compositions, or of BMI, with one million.6
Both organizations operate primarily through blanket licenses that give licensees the right to perform any and all compositions owned by members or affiliates as often as desired for a stated term. Fees for blanket licenses are ordinarily a percentage of total revenues or a flat dollar amount that does not directly depend on the amount or type of music used.7 Radio and television broadcasters are the largest users of music, and almost all of them hold blanket licenses from both ASCAP and BMI.8 CBS held blanket licenses from both organizations for its television network on a continuous basis since the late 1940's and had never attempted to secure any other form of license until this litigation.9
In December 1969 the president of the CBS television network wrote to ASCAP and BMI requesting new performance rights licenses providing for payments measured by actual use of the music.10 CBS filed suit charging violations of the Sherman Act and copyright laws, arguing that ASCAP and BMI are unlawful monopolies and that the blanket license is illegal price fixing, an unlawful tying arrangement, a concerted refusal to deal, and a misuse of copyrights.11 The District Court for the Southern District of New York denied summary judgment on the per se issue in 1972, and after an eight-week trial limited to liability dismissed the complaint in 1975, rejecting the claim that the blanket license was price fixing and a per se violation.12 The Court of Appeals for the Second Circuit in 1977 held that the blanket license issued to television networks was a form of price fixing illegal per se under the Sherman Act, reversed the District Court on that ground, and remanded to consider the appropriate remedy while affirming rejection of CBS's other antitrust claims.13 The Supreme Court granted certiorari in 1978.14
Whether the issuance by ASCAP and BMI to CBS of blanket licenses to copyrighted musical compositions at fees negotiated by them is price fixing per se unlawful under the antitrust laws?15
The per se rule applies to practices that are plainly anticompetitive and lack redeeming virtue, such as agreements among competitors to fix prices on their individual goods or services.16 However, the rule requires considerable experience with the business relationship and does not apply to arrangements that create a different product through integration of services.17
No. The blanket license, as we see it, is not a naked restrain[t] of trade with no purpose except stifling of competition, but rather accompanies the integration of sales, monitoring, and enforcement against unauthorized copyright use. ASCAP and BMI originated to make possible and to facilitate dealings between copyright owners and those who desire to use their music because individual negotiations are impractical.18 The blanket license allows the licensee immediate use of covered compositions without the delay of prior individual negotiations and great flexibility in the choice of musical material.19 ASCAP reduces costs absolutely by creating a blanket license that is sold only a few instead of thousands of times and obviates the need for closely monitoring the networks.20
The consent decree and congressional enactments reflect an opinion that the blanket license is economically beneficial in at least some circumstances.21
The issuance by ASCAP and BMI to CBS of blanket licenses is not price fixing per se unlawful under the antitrust laws.22
Related opinions on this issue
Justice Stevens agreed that ASCAP's blanket license is not a species of price fixing categorically forbidden by the Sherman Act.23 The record before this Court is a full one, reflecting extensive discovery and eight weeks of trial.24 The District Court's findings of fact are thorough and well supported.25
They clearly reveal that the challenged policy does have a significant adverse impact on competition.26 The blanket all-or-nothing license is patently discriminatory.27 The user purchases full access to ASCAP's entire repertoire, even though his needs could be satisfied by a far more limited selection.28
The price he pays for this access is unrelated either to the quantity or the quality of the music he actually uses.29 He would therefore affirm the judgment of the Court of Appeals.30
Whether the blanket licensing practices of ASCAP and BMI constitute misuse of copyrights?31
A finding of copyright misuse may be based on a determination that the licensing practice constitutes per se illegal price fixing under the Sherman Act.32
The blanket licensing practices of ASCAP and BMI do not constitute misuse of copyrights.36